The Midas Letter show is hosted by personality James West, who gets right into things with his guests. He is an advocate of the capital markets. This interview was a great insight for James and his viewers to learn about the great opportunity in the private capital markets that is emerging.
Category: Exempt Market Dealer
Exempt Market Update 2019
The exempt market in Canada is going through some major developments that will fundamentally change how the private market will be seen by investors.
Digital Securities provide companies, who are raising capital, the opportunity to offer their investors another potential exit that until now was only seen as a pipe dream.
It’s no longer a dream, it’s in fact reality. Digital Securities are a direct representation of the securities a company offers to investors, but instead of a piece of paper, it’s put on a technology that is immutable.
Companies around the world are raising capital offering investors Digital Securities, which would allow them to have secondary market trading.
ATS (Alternative Trading Systems) have been around for decades around the globe, in most cases unused due to inefficiencies and high costs.
With over 16 ATS now launching in the USA and more coming in Europe and ASIA we will see more ATS secondary markets for private shares than public stock exchanges in the next 24. The reason is very simple. There is more private companies than public listed.
450 Million private companies vs 85,000 public listed companies worldwide.
$2.4 trillion raised by U.S private companies vs. $2.1 trillion by public companies, a gap that has been widening for 6 years. With the decline in the number of public companies and the rise of private financing will drive a need for efficient secondary market trading of private shares. A blockchain enabled and global compliant digital security is critical to the success of secondary markets for private shares.
On 29 May 2019, OMEGA has filed an application with the regulators to launch a Digital Securities ATS. This announcement shows you how the market is evolving to provide further liquidity in the private capital markets. This will not be the first ATS in Canada.
KoreConX is leading the market by providing the tools for Exempt Market Dealers to put their business online, in a secure and compliant manner, to be connected in the private capital markets ecosystem.
The KoreConX all-in-one platform, powered by IBM’s Hyperledger Fabric, is the key infrastructure that, until now, was missing from the private capital markets. Our globally compliant digital securities protocol is the key to creating efficient securities management throughout their lifecycle.
KoreConX Revolutionizing Private Capital Markets
Capital Raising “Capital markets point of view” dealer
For private issuers, raising capital is the next natural step once you have exhausted other traditional forms of financing. It becomes even more enticing when you read about other firms doing it, and thinking why shouldn’t that be us.
However, being prepared to take the issuer to the next level can be a source of frustration if you’re not ready for it. Nobody is willing to just hand out money; you have to make a convincing case based on fact and incomplete due diligence documentation can leave you out in the cold.
Issuers must prepare comprehensive information which covers who the guiding minds behind the issuer are, who the current shareholders are, business continuity planning, company financials, what is it that makes you unique and a comparison with competitors in the same industry.
Dealers are bombarded by people who claim to have the next best thing, but if you can’t boil it down to facts and figures, they won’t spend much time looking at you. Using up to date technology to gather all the corporate information is critical to your success. Using a platform to house your cap table management, minute book, financials, investor relations and corporate data in electronic format means you can walk into a meeting prepared for whatever they throw at you.
For dealers, having a platform whereby issuers can login and input all the relevant information that you need from them, allows you to control the process and weed out the unprepared ones before you devote a lot of time to analysing potential deals. A controlled mechanism whereby issuers know what information they need to provide and where to put it, saves everyone significant time and effort.
Taking it one step further, for registered dealers to have the ability to easily showcase their approved products online, along with pertinent information about the issuer – corporate biographies, financial information, information about the proposed raise – helps dealers to bring their proposed offerings to potential investors. From a compliance perspective, it means having all of your due diligence in one place, for when the regulators come to visit.
Taking it two steps further, for investors to b able to view potential offerings, input their Know Your Client (KYC) information to determine their eligibility, answer questions to determine the suitability of the investment, have the platform conduct the necessary AML checks and then provide an efficient method for payment, once approved by the CCO, and you have an efficient and cost effective ecosystem which helps issuers, dealers and investors communicate.
KoreConX has an all-in-one platform to accomplish this and ensures that all parties are acting in compliance with securities regulations. Issuers can effectively connect with dealers who in turn can connect with investors all while ensuring that they have the necessary KYP/KYC processes and documentation in place, should they get audited.